Martin Shkreli really is a bad boy of pharma, government argues

The U.S. government has filed for a halt in the civil case against controversial biotech investor Martin Shkreli on concerns that the so-called “bad boy of pharma” could intimidate witnesses and compromise evidence.

The Thursday motion drew upon a high-profile 2013 dispute between Shkreli, who founded biotechnology company Retrophin Inc.
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and a former Retrophin employee, as well as witnesses who said they were threatened by the defendant and even that he tried to tamper with what one told investigators.

Shkreli, who is also the former chief executive officer of Turing Pharmaceuticals, rose to notoriety last year after acquiring a drug used to treat a rare condition and then immediately hiking the price by more than 5,000%.

In addition to Turing and Retrophin, Shkreli has been affiliated with two hedge funds. The civil charges against him, filed by the Securities and Exchange Commission, relate to his work with Retrophin and the hedge funds. They allege that he committed securities fraud by misappropriating about $1 million and misleading investors about the size and performance of his hedge fund, along with other misconduct.

There is also a continuing criminal case against Shkreli. Those parallel cases are part of why civil proceedings should be halted, the government said in its Thursday motion, because Shkreli’s team is using the civil case to gain an edge in the criminal trial.

Prominent in the government’s motion is an alleged year-long period of harassment that Shkreli took up against one-time Retrophin employee Timothy Pierotti, who had received shares in Retrophin that Shkreli wanted him to return.

Shkreli allegedly sent Facebook friend requests and hostile messages to Pierotti and his wife, children, father and other family members. In a 2014 affidavit, Pierotti described it as “repetitive harassment” by text message and on social media, over the course of about a year but particularly around the Christmas holiday.

Pierotti’s story is proof that Shkreli could and has used intimidation in the past, the government said.

The motion also said other witnesses had allegedly experienced threats from Shkreli, and were concerned about what had happened to Pierotti.

“In addition, at least one witness has advised the government that defendant Shkreli reached out to him or her in the spring of 2015—after defendant Shkreli learned of the criminal investigation—and suggested that the witness agree to a false version of certain events,” the motion said.

The motion referenced Shkreli’s use of the Fifth Amendment before a congressional hearing early this month, arguing that the former pharmacy executive would do the same in a deposition and invoking that as a reason for granting the stay, per a previous case’s precedent.

Shkreli’s then-lawyer said the use of the Fifth Amendment was justified by ongoing government investigations into activities at Turing. Thus, “there can be little question that he will choose a similar path in the Civil Case, as he is not merely under investigation for the same conduct in the Criminal Case, but has already been indicted,” the motion said.

But current Shkreli lawyer Brafman wrote in a brief emailed statement that, “While his keen ‘intellect’ can at times be intimidating to mere mortals, nothing else about MS is intimidating at all.”

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